According to Realtor.com Research, September's jobs report came in well below expectations, with payrolls adding just 29,000 jobs compared to what economists had forecasted. What makes this even more concerning is that the prior two months got revised downward significantly, meaning the labor market has been weaker than initially reported. The unemployment rate did tick up slightly, though the actual movement was more modest than the headlines suggest, and the good news is that layoffs haven't accelerated and people filing for unemployment benefits have actually been declining.
The Federal Reserve is watching all this carefully, but the weak jobs number probably won't dramatically change their interest rate plans in the near term. While the labor market is sluggish, unemployment is still low enough that the Fed remains focused on controlling inflation, which is being driven by supply chain issues and energy prices. The odds of a rate hike in October had already been slim before this jobs report came out, and they've gotten even slimmer now, though most experts still expect at least one more hike before the year ends.
Here's where this really hits home for housing: mortgage rates have climbed sharply since early September, and that's making a real dent in what buyers can afford. According to the research, those rate increases work out to roughly nineteen thousand dollars less in purchasing power for someone with a fixed monthly budget. The impact is already showing up in the market, with pending home sales down significantly compared to last year and sellers resorting to price cuts at levels we haven't seen since late 2022.
What I am seeing locally here in the Bay Area and across the East Bay is that this squeeze is real and it's affecting both sides of a transaction. With the job market likely to stay relatively flat through the fall and mortgage rates staying elevated, neither buyers nor sellers should expect things to heat up dramatically anytime soon. The affordability wall is back, and it's making people think twice before making moves, which means we're settling into a more cautious market for the next several months.
